761End of Year Tax Saving
posted on February 14th, 2010
It s not very long before the close of the tax year approaches. It is important to make use of any personal allowances and tax breaks that are useable.
By using the exemptions and allowances you might possibly reduce your tax bill considerably. This can commonly be done promptly and easily with the advice of a financial adviser.
Tax effective investments
Individual savings accounts
Individual Savings Accounts (ISAs). If you are aged over 50 your Isa allowance for the actual tax year is now £10,200. ISA’s are free from capital gains tax, can be used to provide a regular income and are one of the most tax efficient investment vehicles available
Pensions
Pensions are also a tax effective way of saving for retirement. Most people can pay in up to 3,600 gross each yr and obtain basic rate tax relief on the contribution. 40% taxpayers can claim the balance on their self assessment.
Capital Gains Tax Opportunities
If you have made gains on certain types of investments you may be able to use your annual capital gains tax allowance. This will let you to make gains up to this threshold without incurring a liability to tax. In some cases it is also possible to carry forward past year’s losses.
Income Tax Planning
Each person can receive a personal allowance of £6,475 without acquiring any income tax. For wedded pairs or civil partnerships, where one is a higher rate taxpayer it is worth looking to see who owns the investment and perhaps look to transfer assets into the
20% twenty percent taxpayers name.Making annual gifts is also a means of cutting your liability to income tax.
IHT planning
Every Person can make an IHT exempt gift each year of up to £3000 in a tax yr. Any unused exemption can be carried forward for 1 year only. If you are able to make gifts out of income without it affecting your standard of living you may be able to make gifts over the annual exemption level.
If you think your estate could be in excess of the IHT nil rate band then effective tax planning can be applied to reduce your estates potential inheritance liability. This could be a appropriately drafted will or instead trust planning.
Graham Bond is a Financial Advisor based in Chipping Sodbury, Bristol, South Gloucestershire.
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